PFSweb Reports Third Quarter 2016 Results
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ALLEN, TX -- (Marketwired) -- 11/09/16 -- PFSweb, Inc. (NASDAQ: PFSW) ("PFS"), a global commerce service provider, reported results for the third quarter ended September 30, 2016.
Third Quarter 2016 Summary vs. Same Year-Ago Quarter (where applicable)
- Total revenues increased 12% to $79.9 million
- Service fee equivalent revenue (a non-GAAP measure defined below) increased 18% to $54.5 million
- Service fee gross margin was 31.4% compared to 33.7%
- Net loss was $1.0 million or $(0.06) per share compared to a loss of $3.7 million or $(0.21) per share
Management Commentary "As described in our October 2016 pre-announcement release, our third quarter results were impacted by an operational challenge with a newly-launched fulfillment client," said Mike Willoughby, CEO of PFS. "This client's unique business model led to unanticipated operational requirements, including incremental labor and operating costs to support their seasonal peak volumes in late Q3 and early Q4. Now that we've supported this client through their seasonal peak, we will continue to work diligently to re-engineer a solution that will bring this client engagement to our desired level of profitability, while continuing to meet the operational needs of the client.
"Our incremental investments in sales, marketing and infrastructure this year continue to drive improved results as we generated another solid quarter of long-term engagements and project wins from new and existing clients. We continue to maintain a strong pipeline and expect 2016 to mark the largest number of bookings in the history of our company.
"As we prepare for the upcoming holiday season, we will continue to strive toward enabling our clients to maximize their holiday sales performance through our support and execution of their ecommerce initiatives."
Third Quarter 2016 Financial Results Total revenues in the third quarter of 2016 increased 12% to $79.9 million compared to $71.2 million in the same period of 2015. Service fee revenue in the third quarter increased 18% to $53.8 million compared to $45.5 million last year. Product revenue was $11.7 million compared to $14.4 million in the same period of 2015 due to ongoing restructuring activities by the company's last remaining client in this segment and their discontinuation of certain product lines.
Service fee equivalent revenue increased 18% to $54.5 million compared to $46.2 million in the year-ago quarter, driven by both new and expanded client relationships, as well as approximately $2.7 million of incremental service fees generated in the third quarter of 2016 by the company's acquired entities, CrossView and Conexus, which were acquired in 2015 and 2016, respectively.
Service fee gross margin in the third quarter of 2016 was 31.4% compared to 33.7% in the same period of 2015. The decrease was primarily due to higher facility and other operating costs applicable to certain new large fulfillment clients won during the year, as well as incremental labor and operating costs for the newly launched client referred to above. This was partially offset by higher-margin professional services activity.
Net loss in the third quarter of 2016 was $1.0 million or $(0.06) per share, compared to a net loss of $3.7 million or $(0.21) per share in the same period of 2015. Net loss in the third quarter of 2016 included a $0.5 million net benefit from acquisition-related, restructuring and other (income) costs, $0.3 million in stock-based compensation expense, and $1.2 million in amortization of acquisition-related intangible assets. This compares to $2.6 million expense in acquisition-related, restructuring and other (income) costs, $1.5 million in stock-based compensation expense, and $1.0 million in amortization of acquisition-related intangible assets in the same period of 2015.
Adjusted EBITDA (a non-GAAP measure defined below) was $3.6 million compared to $5.4 million in the same period of 2015. As a percentage of service fee equivalent revenue, adjusted EBITDA was 6.6% compared to 11.8% in the year-ago quarter. The decline in adjusted EBITDA margin was primarily driven by incremental labor and operating costs associated with servicing certain new clients, as well as an increase in sales and marketing and infrastructure resources. This was partially offset by higher-margin professional services activity.
Non-GAAP net loss (a non-GAAP measure defined below) in the third quarter of 2016 was $0.1 million, compared to Non-GAAP net income of $1.5 million in the third quarter of 2015.
At September 30, 2016, cash and cash equivalents totaled $15.7 million compared to $21.8 million at December 31, 2015. Total debt was $60.4 million compared to $35.4 million at December 31, 2015, with the increase primarily driven by funds used to support the June 2016 Conexus acquisition and payment of calendar 2015 related earn-out liabilities applicable to prior acquisitions, as well as funding of incremental working capital and capital expenditure requirements.
2016 & 2017 Outlook As disclosed in the company's October pre-announcement release, PFS expects 2016 service fee equivalent revenue to range between $222 million and $228 million, reflecting growth of 20% to 23% from 2015. The company also expects adjusted EBITDA to range between $18 million and $20 million, which compares to $20.7 million in 2015.
For 2017, PFS expects continued strong growth in service fee equivalent revenue as the company realizes the full year benefit of 2016 client wins and generates incremental revenue from new and expanded client relationships. At this time, the company is targeting 2017 service fee equivalent revenue to range between $245 million and $260 million. The company is also targeting adjusted EBITDA to range between $23 million and $26 million. This adjusted EBITDA target includes infrastructure expenditures to support the company's future growth strategies as well as expected costs in early 2017 associated with the continued remediation of the fulfillment client implementation noted above.
Conference Call PFS will conduct a conference call today at 5:00 p.m. Eastern time to discuss its results for the third quarter ended September 30, 2016.
CEO Michael Willoughby and CFO Tom Madden will host the conference call, followed by a question and answer period.
Date: Wednesday, November 9, 2016 Time: 5:00 p.m. Eastern Time (4:00 p.m. Central time) Toll-free dial-in number: 1-888-452-4005 International dial-in number: 1-719-325-2262 Conference ID: 7262018
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 1-949-574-3860.
The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=121850 and via the investor relations section of the company's website at www.pfsweb.com.
A replay of the conference call will be available after 8:00 p.m. Eastern Time on the same day through November 23, 2016.
Toll-free replay number: 1-844-512-2921 International replay number: 1-412-317-6671 Replay ID: 7262018
About PFSweb, Inc. PFSweb (PFS) (NASDAQ: PFSW) is a global commerce service provider of solutions including digital strategy consulting, digital agency and marketing services, technology development services, business process outsourcing services, and a complete omni-channel technology ecosystem. The company provides these solutions and services to major brand names and other companies seeking to optimize every customer experience and enhance their traditional and online business channels. PFS supports organizations across various industries, including Procter & Gamble, L'Oreal, LEGO, Canada Goose, ASICS, Roots Canada Ltd., PANDORA, Diageo, Anastasia Beverly Hills, See's Candies, T.J. Maxx, the United States Mint, and many more. PFS is headquartered in Allen, TX with additional locations in Tennessee, Mississippi, Minnesota, Washington, New York, Ohio, North Carolina, Canada, Belgium, United Kingdom, Bulgaria, and India. For more information, please visit www.pfsweb.com or download the free PFS IR App on your iPhone, iPad, or Android device.
Non-GAAP Financial Measures This news release contains certain non-GAAP measures, including non-GAAP net income (loss), earnings before interest, income taxes, depreciation and amortization (EBITDA), Adjusted EBITDA and service fee equivalent revenue.
Non-GAAP net income (loss) represents net income (loss) calculated in accordance with U.S. GAAP as adjusted for the impact of non-cash stock-based compensation expense, acquisition-related, restructuring and other (income) costs and the amortization of acquisition-related intangible assets.
EBITDA represents earnings (or losses) before interest, income taxes, depreciation, and amortization. Adjusted EBITDA further eliminates the effect of stock-based compensation, acquisition-related, restructuring and other (income) costs.
Service fee equivalent revenue represents service fee revenue plus the gross profit earned on product revenue and does not alter existing revenue recognition.
Our service fee equivalent revenue target for 2016 includes an estimated gross margin on product sales of approximately $3 million (based on targeted product revenue of $50 million less targeted cost of product revenue of $47 million) plus a targeted range of between $219 million to $225 million of service fee revenue.
The adjusted EBITDA outlook for 2016 have not been reconciled to the company's net loss outlook for the same period because certain items that would impact interest expense, income tax provision (benefit), depreciation and amortization (including amortization of acquisition-related intangible assets), stock-based compensation, and acquisition-related, restructuring and other (income) costs, all of which are reconciling items between net loss and adjusted EBITDA, cannot be reasonably predicted. Accordingly, reconciliation of adjusted EBITDA outlook to net loss outlook for 2016 is not available without unreasonable effort.
Non-GAAP net income (loss), EBITDA, Adjusted EBITDA and service fee equivalent revenue are used by management, analysts, investors and other interested parties in evaluating our operating performance compared to that of other companies in our industry. The calculation of non-GAAP net income (loss) eliminates the effect of stock-based compensation, acquisition-related, restructuring and other (income) costs and amortization of acquisition-related intangible assets and EBITDA and adjusted EBITDA further eliminate the effect of financing, income taxes and the accounting effects of capital spending, which items may vary from different companies for reasons unrelated to overall operating performance. Service fee equivalent revenue allows client contracts with similar operational support models but different financial models to be combined as if all contracts were being operated on a service fee revenue basis.
PFS believes these non-GAAP measures provide useful information to both management and investors by focusing on certain operational metrics and excluding certain expenses in order to present its core operating performance and results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. The non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.
Forward-Looking Statements The matters discussed herein consist of forward-looking information under the Private Securities Litigation Reform Act of 1995 and is subject to and involves risks and uncertainties, which could cause actual results to differ materially from the forward-looking information. PFS' Annual Report on Form 10-K for the year ended December 31, 2015 identifies certain factors that could cause actual results to differ materially from those projected in any forward looking statements made and investors are advised to review the Annual Report of the company and the Risk Factors described therein. PFS undertakes no obligation to update publicly any forward-looking statement for any reason, even if new information becomes available or other events occur in the future. There may be additional risks that we do not currently view as material or that are not presently known.
PFSweb, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (A)
(In Thousands, Except Share Data)
(Unaudited)
September 30, December 31,
2016 2015
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 15,699 $ 21,781
Restricted cash 219 275
Accounts receivable, net of allowance for
doubtful accounts of $539 and $600 at
September 30, 2016 and December 31, 2015,
respectively 64,934 70,700
Inventories, net of reserves of $585 and
$739 at September 30, 2016 and December 31,
2015, respectively 7,155 9,262
Other receivables 4,821 8,704
Prepaid expenses and other current assets 5,017 5,662
------------- -------------
Total current assets 97,845 116,384
PROPERTY AND EQUIPMENT, net 28,812 24,093
INTANGIBLE ASSETS, net 8,125 8,810
GOODWILL 45,929 39,829
OTHER ASSETS 2,433 2,174
------------- -------------
Total assets 183,144 191,290
============= =============
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and
capital lease obligations $ 5,672 $ 3,153
Trade accounts payable 38,009 51,170
Deferred revenue 6,238 7,390
Performance-based contingent payments - 11,679
Accrued expenses 25,109 30,563
------------- -------------
Total current liabilities 75,028 103,955
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
less current portion 54,749 32,238
DEFERRED REVENUE 4,280 4,499
DEFERRED RENT 4,849 4,362
PERFORMANCE-BASED CONTINGENT PAYMENTS 380 2,478
------------- -------------
Total liabilities 139,286 147,532
------------- -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1.00 par value; 1,000,000
shares authorized; none issued and
outstanding - -
Common stock, $.001 par value; 35,000,000
shares authorized; 18,740,100 and
18,136,218 shares issued at September 30,
2016 and December 31, 2015, respectively;
and 18,706,633 and 18,012,751 shares
outstanding as of September 30, 2016 and
December 31, 2015, respectively 19 18
Additional paid-in capital 145,045 141,948
Accumulated deficit (101,760) (97,787)
Accumulated other comprehensive income
(loss) 679 (296)
Treasury stock at cost, 33,467 shares (125) (125)
------------- -------------
Total shareholders' equity 43,858 43,758
------------- -------------
Total liabilities and shareholders' equity $ 183,144 $ 191,290
============= =============
(A) The financial data above should be read in conjunction with the audited
consolidated financial statements of PFSweb, Inc. included in its Form 10-K
for the year ended December 31, 2015.
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations (A)
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2016 2015 2016 2015
--------- --------- --------- ---------
REVENUES:
Service fee revenue $ 53,788 $ 45,528 $ 154,271 $ 121,311
Product revenue, net 11,671 14,419 36,658 44,731
Pass-thru revenue 14,451 11,236 41,259 32,163
--------- --------- --------- ---------
Total revenues 79,910 71,183 232,188 198,205
--------- --------- --------- ---------
COSTS OF REVENUES:
Cost of service fee revenue 36,903 30,193 103,547 81,993
Cost of product revenue 10,994 13,702 34,649 42,321
Cost of pass-thru revenue 14,451 11,236 41,259 32,163
--------- --------- --------- ---------
Total costs of revenues 62,348 55,131 179,455 156,477
--------- --------- --------- ---------
Gross profit 17,562 16,052 52,733 41,728
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 17,568 18,778 53,926 47,068
--------- --------- --------- ---------
Income (loss) from
operations (6) (2,726) (1,193) (5,340)
INTEREST EXPENSE (INCOME), NET 714 706 1,807 1,247
--------- --------- --------- ---------
Income (loss) before income
taxes (720) (3,432) (3,000) (6,587)
INCOME TAX EXPENSE (BENEFIT) 319 238 973 676
--------- --------- --------- ---------
NET INCOME (LOSS) $ (1,039) $ (3,670) $ (3,973) $ (7,263)
========= ========= ========= =========
NON-GAAP NET INCOME (LOSS) $ (60) $ 1,452 $ 134 $ 2,193
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE:
Basic $ (0.06) $ (0.21) $ (0.21) $ (0.42)
========= ========= ========= =========
Diluted $ (0.06) $ (0.21) $ (0.21) $ (0.42)
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING:
Basic 18,699 17,829 18,552 17,449
========= ========= ========= =========
Diluted 18,699 17,829 18,552 17,449
========= ========= ========= =========
EBITDA $ 3,797 $ 1,355 $ 10,013 $ 5,305
========= ========= ========= =========
ADJUSTED EBITDA $ 3,599 $ 5,434 $ 11,252 $ 13,238
========= ========= ========= =========
(A) The financial data above should be read in conjunction with the audited
consolidated financial statements of PFSweb, Inc. included in its Form 10-K
for the year ended December 31, 2015.
PFSweb, Inc. and Subsidiaries
Unaudited Reconciliation of Certain Non-GAAP Items to GAAP
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2016 2015 2016 2015
--------- --------- --------- ---------
NET INCOME (LOSS) $ (1,039) $ (3,670) $ (3,973) $ (7,263)
Income tax expense (benefit) 319 238 973 676
Interest expense, net 714 706 1,807 1,247
Depreciation and amortization 3,803 4,081 11,206 10,645
--------- --------- --------- ---------
EBITDA $ 3,797 $ 1,355 $ 10,013 $ 5,305
Stock-based compensation 347 1,492 1,743 3,446
Acquisition-related,
restructuring and other
(income) costs (545) 2,587 (504) 4,487
--------- --------- --------- ---------
ADJUSTED EBITDA $ 3,599 $ 5,434 $ 11,252 $ 13,238
========= ========= ========= =========
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2016 2015 2016 2015
--------- --------- --------- ---------
NET INCOME (LOSS) $ (1,039) $ (3,670) $ (3,973) $ (7,263)
Stock-based compensation 347 1,492 1,743 3,446
Amortization of acquisition-
related intangible assets 1,177 1,043 2,868 1,523
Acquisition-related,
restructuring and other
(income) costs (545) 2,587 (504) 4,487
--------- --------- --------- ---------
NON-GAAP NET INCOME (LOSS) $ (60) $ 1,452 $ 134 $ 2,193
========= ========= ========= =========
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2016 2015 2016 2015
--------- --------- --------- ---------
TOTAL REVENUES $ 79,910 $ 71,183 $ 232,188 $ 198,205
Pass-thru revenue (14,451) (11,236) (41,259) (32,163)
Cost of product revenue (10,994) (13,702) (34,649) (42,321)
--------- --------- --------- ---------
SERVICE FEE EQUIVALENT REVENUE $ 54,465 $ 46,245 $ 156,280 $ 123,721
========= ========= ========= =========
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended September 30, 2016
(In Thousands)
Business &
Retail
PFSweb Connect Eliminations Consolidated
------------- ------------ ------------- -------------
REVENUES:
Service fee revenue $ 50,339 $ 3,449 $ - $ 53,788
Service fee revenue
- affiliate 2,978 231 (3,209) -
Product revenue, net - 11,671 - 11,671
Pass-thru revenue 14,451 - - 14,451
------------ ------------ ------------ ------------
Total revenues 67,768 15,351 (3,209) 79,910
------------ ------------ ------------ ------------
COSTS OF REVENUES:
Cost of service fee
revenue 36,700 3,359 (3,156) 36,903
Cost of product
revenue - 10,994 - 10,994
Cost of pass-thru
revenue 14,451 - - 14,451
------------ ------------ ------------ ------------
Total costs of
revenues 51,151 14,353 (3,156) 62,348
------------ ------------ ------------ ------------
Gross profit 16,617 998 (53) 17,562
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 17,064 557 (53) 17,568
------------ ------------ ------------ ------------
Income (loss) from
operations (447) 441 - (6)
INTEREST EXPENSE
(INCOME), NET 631 83 - 714
------------ ------------ ------------ ------------
Income (loss)
before income
taxes (1,078) 358 - (720)
INCOME TAX EXPENSE
(BENEFIT) 195 124 - 319
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (1,273) $ 234 $ - $ (1,039)
============ ============ ============ ============
NON-GAAP NET INCOME
(LOSS) $ (294) $ 234 $ - $ (60)
============ ============ ============ ============
EBITDA $ 3,350 $ 447 $ - $ 3,797
============ ============ ============ ============
ADJUSTED EBITDA $ 3,152 $ 447 $ - $ 3,599
============ ============ ============ ============
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (1,273) $ 234 $ - (1,039)
Income tax expense
(benefit) 195 124 - 319
Interest expense
(income), net 631 83 - 714
Depreciation and
amortization 2,620 6 - 2,626
Amortization of
acquisition-
related
intangible assets 1,177 - - 1,177
------------ ------------ ------------ ------------
EBITDA $ 3,350 $ 447 $ - $ 3,797
Stock-based
compensation 347 - - 347
Acquisition-
related,
restructuring and
other income (545) - - (545)
------------ ------------ ------------ ------------
ADJUSTED EBITDA $ 3,152 $ 447 $ - $ 3,599
============ ============ ============ ============
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (1,273) $ 234 $ - $ (1,039)
Stock-based
compensation 347 - - 347
Amortization of
acquisition-
related
intangible assets 1,177 - - 1,177
Acquisition-
related,
restructuring and
other income (545) - - (545)
------------ ------------ ------------ ------------
NON-GAAP NET INCOME
(LOSS) $ (294) $ 234 $ - $ (60)
============ ============ ============ ============
Note: Business and Retail Connect includes our Supplies Distributors and
PFSweb Retail Connect operations, which operate similar financial models on
behalf of our client relationships.
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Nine Months Ended September 30, 2016
(In Thousands)
Business &
Retail
PFSweb Connect Eliminations Consolidated
------------ ------------ ------------ ------------
REVENUES:
Service fee revenue $ 143,193 $ 11,078 $ - $ 154,271
Service fee revenue
- affiliate 9,787 689 (10,476) -
Product revenue,
net - 36,658 - 36,658
Pass-thru revenue 41,259 - - 41,259
------------ ------------ ------------ ------------
Total revenues 194,239 48,425 (10,476) 232,188
------------ ------------ ------------ ------------
COSTS OF REVENUES:
Cost of service fee
revenue 103,077 10,815 (10,345) 103,547
Cost of product
revenue - 34,649 - 34,649
Cost of pass-thru
revenue 41,259 - - 41,259
------------ ------------ ------------ ------------
Total costs of
revenues 144,336 45,464 (10,345) 179,455
------------ ------------ ------------ ------------
Gross profit 49,903 2,961 (131) 52,733
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 52,419 1,638 (131) 53,926
------------ ------------ ------------ ------------
Income (loss)
from operations (2,516) 1,323 - (1,193)
INTEREST EXPENSE
(INCOME), NET 1,551 256 - 1,807
------------ ------------ ------------ ------------
Income (loss)
before income
taxes (4,067) 1,067 - (3,000)
INCOME TAX EXPENSE
(BENEFIT) 593 380 - 973
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (4,660) $ 687 $ - $ (3,973)
============ ============ ============ ============
NON-GAAP NET INCOME
(LOSS) $ (553) $ 687 $ - $ 134
============ ============ ============ ============
EBITDA $ 8,672 $ 1,341 $ - $ 10,013
============ ============ ============ ============
ADJUSTED EBITDA $ 9,911 $ 1,341 $ - $ 11,252
============ ============ ============ ============
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (4,660) $ 687 $ - (3,973)
Income tax
expense
(benefit) 593 380 - 973
Interest expense
(income), net 1,551 256 - 1,807
Depreciation and
amortization 8,320 18 - 8,338
Amortization of
acquisition-
related
intangible
assets 2,868 - - 2,868
------------ ------------ ------------ ------------
EBITDA $ 8,672 $ 1,341 $ - $ 10,013
Stock-based
compensation 1,743 - - 1,743
Acquisition-
related,
restructuring
and other income (504) - - (504)
------------ ------------ ------------ ------------
ADJUSTED EBITDA $ 9,911 $ 1,341 $ - $ 11,252
============ ============ ============ ============
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (4,660) $ 687 $ - $ (3,973)
Stock-based
compensation 1,743 - - 1,743
Amortization of
acquisition-
related
intangible
assets 2,868 - - 2,868
Acquisition-
related,
restructuring
and other income (504) - - (504)
------------ ------------ ------------ ------------
NON-GAAP NET INCOME
(LOSS) $ (553) $ 687 $ - $ 134
============ ============ ============ ============
Note: Business and Retail Connect includes our Supplies Distributors and
PFSweb Retail Connect operations, which operate similar financial models on
behalf of our client relationships.
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Three Months Ended September 30, 2015
(In Thousands)
Business &
Retail
PFSweb Connect Eliminations Consolidated
------------ ------------ ------------ ------------
REVENUES:
Service fee
revenue $ 42,167 $ 3,361 $ - $ 45,528
Service fee
revenue -
affiliate 3,494 195 (3,689) -
Product revenue,
net - 14,419 - 14,419
Pass-thru revenue 11,236 - - 11,236
------------ ------------ ------------ ------------
Total revenues 56,897 17,975 (3,689) 71,183
------------ ------------ ------------ ------------
COSTS OF REVENUES:
Cost of service
fee revenue 30,369 3,323 (3,499) 30,193
Cost of product
revenue - 13,702 - 13,702
Cost of pass-thru
revenue 11,236 - - 11,236
------------ ------------ ------------ ------------
Total costs of
revenues 41,605 17,025 (3,499) 55,131
------------ ------------ ------------ ------------
Gross profit 15,292 950 (190) 16,052
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 18,049 919 (190) 18,778
------------ ------------ ------------ ------------
Income (loss)
from operations (2,757) 31 - (2,726)
INTEREST EXPENSE
(INCOME), NET 584 122 - 706
------------ ------------ ------------ ------------
Income (loss)
before income
taxes (3,341) (91) - (3,432)
INCOME TAX EXPENSE
(BENEFIT) 171 67 - 238
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (3,512) $ (158) $ - $ (3,670)
============ ============ ============ ============
NON-GAAP NET INCOME
(LOSS) $ 1,288 $ 162 $ - $ 1,450
============ ============ ============ ============
EBITDA $ 1,309 $ 46 $ - $ 1,355
============ ============ ============ ============
ADJUSTED EBITDA $ 5,066 $ 366 $ - $ 5,432
============ ============ ============ ============
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
NET INCOME (LOSS) $ (3,512) $ (158) $ - (3,670)
Income tax
expense
(benefit) 171 67 - 238
Interest expense
(income), net 584 122 - 706
Depreciation and
amortization 3,023 15 - 3,038
Amortization of
acquisition-
related
intangible
assets 1,043 - - 1,043
------------ ------------ ------------ ------------
EBITDA $ 1,309 $ 46 $ - $ 1,355
Stock-based
compensation 1,492 - - 1,492
Acquisition-
related,
restructuring
and other costs 2,265 320 - 2,585
------------ ------------ ------------ ------------
ADJUSTED EBITDA $ 5,066 $ 366 $ - $ 5,432
============ ============ ============ ============
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (3,512) $ (158) $ - $ (3,670)
Stock-based
compensation 1,492 - - 1,492
Amortization of
acquisition-
related
intangible
assets 1,043 - - 1,043
Acquisition-
related,
restructuring
and other costs 2,265 320 - 2,585
------------ ------------ ------------ ------------
NON-GAAP NET INCOME
(LOSS) $ 1,288 $ 162 $ - $ 1,450
============ ============ ============ ============
Note: Business and Retail Connect includes our Supplies Distributors and
PFSweb Retail Connect operations, which operate similar financial models on
behalf of our client relationships.
PFSweb, Inc. and Subsidiaries
Unaudited Consolidating Statements of Operations
For the Nine Months Ended September 30, 2015
(In Thousands)
Business &
Retail
PFSweb Connect Eliminations Consolidated
------------ ------------ ------------ ------------
REVENUES:
Service fee revenue $ 110,740 $ 10,571 $ - $ 121,311
Service fee revenue
- affiliate 10,137 568 (10,705) -
Product revenue,
net - 44,731 - 44,731
Pass-thru revenue 32,163 - - 32,163
------------ ------------ ------------ ------------
Total revenues 153,040 55,870 (10,705) 198,205
------------ ------------ ------------ ------------
COSTS OF REVENUES:
Cost of service fee
revenue 81,637 10,467 (10,111) 81,993
Cost of product
revenue - 42,321 - 42,321
Cost of pass-thru
revenue 32,163 - - 32,163
------------ ------------ ------------ ------------
Total costs of
revenues 113,800 52,788 (10,111) 156,477
------------ ------------ ------------ ------------
Gross profit 39,240 3,082 (594) 41,728
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 45,528 2,134 (594) 47,068
------------ ------------ ------------ ------------
Income (loss)
from operations (6,288) 948 - (5,340)
INTEREST EXPENSE
(INCOME), NET 911 336 - 1,247
------------ ------------ ------------ ------------
Income (loss)
before income
taxes (7,199) 612 - (6,587)
INCOME TAX EXPENSE
(BENEFIT) 363 313 - 676
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (7,562) $ 299 $ - $ (7,263)
============ ============ ============ ============
NON-GAAP NET INCOME
(LOSS) $ 1,574 $ 619 $ - $ 2,193
============ ============ ============ ============
EBITDA $ 4,299 $ 1,006 $ - $ 5,305
============ ============ ============ ============
ADJUSTED EBITDA $ 11,912 $ 1,326 $ - $ 13,238
============ ============ ============ ============
A reconciliation of NET INCOME (LOSS) to EBITDA and ADJUSTED EBITDA
follows:
Amortization of
acquisition-
related
intangible
assets
NET INCOME (LOSS) $ (7,562) $ 299 $ - (7,263)
Income tax
expense
(benefit) 363 313 - 676
Interest expense
(income), net 911 336 - 1,247
Depreciation and
amortization 9,064 58 - 9,122
Amortization of
acquisition-
related
intangible
assets 1,523 - - 1,523
------------ ------------ ------------ ------------
EBITDA $ 4,299 $ 1,006 $ - $ 5,305
Stock-based
compensation 3,446 - - 3,446
Acquisition-
related,
restructuring
and other costs 4,167 320 - 4,487
------------ ------------ ------------ ------------
ADJUSTED EBITDA $ 11,912 $ 1,326 $ - $ 13,238
============ ============ ============ ============
A reconciliation of NET INCOME (LOSS) to NON-GAAP NET INCOME (LOSS)
follows:
NET INCOME (LOSS) $ (7,562) $ 299 $ - $ (7,263)
Stock-based
compensation 3,446 - - 3,446
Amortization of
acquisition-
related
intangible
assets 1,523 - - 1,523
Acquisition-
related,
restructuring
and other costs 4,167 320 - 4,487
------------ ------------ ------------ ------------
NON-GAAP NET INCOME
(LOSS) $ 1,574 $ 619 $ - $ 2,193
============ ============ ============ ============
Note: Business and Retail Connect includes our Supplies Distributors and
PFSweb Retail Connect operations, which operate similar financial models on
behalf of our client relationships.
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of September 30, 2016
(In Thousands)
Business &
Retail
PFSweb Connect Eliminations Consolidated
------------ ------------ ------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $ 5,639 $ 10,060 $ - $ 15,699
Restricted cash - 219 - 219
Accounts
receivable, net 50,844 14,993 (903) 64,934
Inventories, net - 7,155 - 7,155
Other receivables 600 4,221 - 4,821
Prepaid expenses
and other current
assets 4,173 844 - 5,017
------------ ------------ ------------ ------------
Total current
assets 61,256 37,492 (903) 97,845
PROPERTY AND
EQUIPMENT, net 28,803 9 - 28,812
RECEIVABLE/INVESTMEN
T IN AFFILIATES 9,342 - (9,342) -
INTANGIBLE ASSETS,
net 8,125 - - 8,125
GOODWILL 45,929 - - 45,929
OTHER ASSETS 2,433 - - 2,433
------------ ------------ ------------ ------------
Total assets 155,888 37,501 (10,245) 183,144
============ ============ ============ ============
LIABILITIES AND
SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of
long-term debt
and capital lease
obligations $ 5,672 $ - $ - $ 5,672
Trade accounts
payable 13,395 25,517 (903) 38,009
Deferred revenue 6,238 - - 6,238
Performance-based
contingent
payments - - - -
Accrued expenses 22,270 2,839 - 25,109
------------ ------------ ------------ ------------
Total current
liabilities 47,575 28,356 (903) 75,028
LONG-TERM DEBT AND
CAPITAL LEASE
OBLIGATIONS, less
current portion 54,749 - - 54,749
PAYABLE TO
AFFILIATES - 22,045 (22,045) -
DEFERRED REVENUE 4,280 - - 4,280
DEFERRED RENT 4,849 - - 4,849
PERFORMANCE-BASED
CONTINGENT PAYMENTS 380 - - 380
------------ ------------ ------------ ------------
Total
liabilities 111,833 50,401 (22,948) 139,286
------------ ------------ ------------ ------------
COMMITMENTS AND
CONTINGENCIES
SHAREHOLDERS'
EQUITY:
Common stock 19 19 (19) 19
Capital
contributions - 1,000 (1,000) -
Additional paid-in
capital 145,045 28,060 (28,060) 145,045
Retained earnings
(accumulated
deficit) (101,563) (43,205) 43,008 (101,760)
Accumulated other
comprehensive
income (loss) 679 1,226 (1,226) 679
Treasury stock (125) - - (125)
------------ ------------ ------------ ------------
Total
shareholders'
equity 44,055 (12,900) 12,703 43,858
------------ ------------ ------------ ------------
Total
liabilities and
shareholders'
equity $ 155,888 $ 37,501 $ (10,245) $ 183,144
============ ============ ============ ============
(A) The financial data above should be read in conjunction with the audited
consolidated financial statements of PFSweb, Inc. included in its Form 10-K
for the year ended December 31, 2015.
PFSweb, Inc. and Subsidiaries
Unaudited Condensed Consolidating Balance Sheets
as of December 31, 2015
(In Thousands)
Business &
Retail
PFSweb Connect Eliminations Consolidated
------------ ------------ ------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $ 7,962 $ 13,819 $ - $ 21,781
Restricted cash 51 224 - 275
Accounts
receivable, net 51,231 20,348 (879) 70,700
Inventories, net - 9,262 - 9,262
Other receivables 2,621 6,083 - 8,704
Prepaid expenses
and other current
assets 4,744 918 - 5,662
------------ ------------ ------------ ------------
Total current
assets 66,609 50,654 (879) 116,384
PROPERTY AND
EQUIPMENT, net 24,065 28 - 24,093
RECEIVABLE/INVESTMEN
T IN AFFILIATES 9,577 - (9,577) -
INTANGIBLE ASSETS,
net 8,810 - - 8,810
GOODWILL 39,829 - - 39,829
OTHER ASSETS 2,174 - - 2,174
------------ ------------ ------------ ------------
Total assets 151,064 50,682 (10,456) 191,290
============ ============ ============ ============
LIABILITIES AND
SHAREHOLDERS EQUITY
CURRENT LIABILITIES:
Current portion of
long-term debt
and capital lease
obligations $ 3,153 $ - $ - $ 3,153
Trade accounts
payable 15,329 36,710 (869) 51,170
Deferred revenue 7,390 - - 7,390
Performance-based
contingent
payments 11,679 - - 11,679
Accrued expenses 26,015 4,558 (10) 30,563
------------ ------------ ------------ ------------
Total current
liabilities 63,566 41,268 (879) 103,955
LONG-TERM DEBT AND
CAPITAL LEASE
OBLIGATIONS, less
current portion 32,238 - - 32,238
PAYABLE TO
AFFILIATES - 22,056 (22,056) -
DEFERRED REVENUE 4,499 - - 4,499
DEFERRED RENT 4,362 - - 4,362
PERFORMANCE-BASED
CONTINGENT PAYMENTS 2,478 - - 2,478
------------ ------------ ------------ ------------
Total
liabilities 107,143 63,324 (22,935) 147,532
------------ ------------ ------------ ------------
COMMITMENTS AND
CONTINGENCIES
SHAREHOLDERS'
EQUITY:
Common stock 18 19 (19) 18
Capital
contributions - 1,000 (1,000) -
Additional paid-in
capital 141,948 28,060 (28,060) 141,948
Retained earnings
(accumulated
deficit) (97,616) (42,827) 42,656 (97,787)
Accumulated other
comprehensive
income (loss) (304) 1,106 (1,098) (296)
Treasury stock (125) - - (125)
------------ ------------ ------------ ------------
Total
shareholders'
equity 43,921 (12,642) 12,479 43,758
------------ ------------ ------------ ------------
Total
liabilities and
shareholders'
equity $ 151,064 $ 50,682 $ (10,456) $ 191,290
============ ============ ============ ============
(A) The financial data above should be read in conjunction with the audited
consolidated financial statements of PFSweb, Inc. included in its Form 10-K
for the year ended December 31, 2015.
Company Contact: Michael C. Willoughby Chief Executive Officer Or Thomas J. Madden Chief Financial Officer Tel 972-881-2900 Investor Relations: Liolios Scott Liolios or Sean Mansouri Tel 949-574-3860 Email Contact
Source: PFSweb, Inc.
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